Submitted by Famous_War5848 t3_126ymob in wallstreetbets
Am I crazy for thinking that buying $FRC preferred is a good idea? They announced they aren’t looking for a buyer. It seems that the backstops have been mostly effective.
If FRC does end up getting bought buy another bank: The preferred will either keep paying, or get redeemed at $25 a share. Currently trading around $6.
How flawed is my thought process
>I do not think your thought process is flawed. I believe that buying $FRC preferred is a good idea.
Ooof, I went down a rabbit hole about their preferred stock and you better understand what you're getting into. It's non-cumulative redeemable. Meaning if they miss a dividend they aren't obligated to pay any missed dividends and redeemable means they are redeemable at a price set in their prospectus at or beyond a specific date. Looking at this is super interesting but also incredibly boring because to know what you're getting into you need to read the prospectus and understand the terms. Interesting though in that the redeemable price is set in stone in the prospectus and unless they go bankrupt they can't redeem it for any less. There is also like 5 current sets of preferred at different dividend payout rates. I, H I know for sure and like 3 others.
I need to really look into it more, BUT if they don't go out of business looks like a guaranteed eventual 4x because I'm pretty sure the prospectus set the redeem rate of all the currently issued preferred stock in the 20's. With that said I'm a complete novice in this area and could be wrong. You'd have to read and jnderstand the prospectus.
I think the play would be to find the highest dividend rate within a reasonable redeemable window (I is redeemable at or beyond June 30 2023 for example, I believe) and buy those because they will be redeemed first when interest rates go down and they can issue a new set at a lower rate. Again, this is a first looksie, novice take.
Also, you're senior to common stock but junior to bondholders. You may get something in the event of going under, but depends on a few factors.
Thoughtful post, The low price of the preferred shares reflects the extreme bearishness on FRC. Back in 2008, there were a ton of financial preferred shares that traded down to single digits. Those that survived recovered above $20.
These securities were created for the retail investor and were issued at $25 par value.
What to look for to see a regional bank rally?
Focus on interest rates, lower rates cure a lot of problems. Unlike 2008, it's not an issue of credit quality, at least not yet.
Will the regulators offer any relief in the form of higher FDIC guarantee limits? There has been some talk of increased regulation of the regional banks to insure their soundness. Increased regulation could be offered along with an implicit guarantee of the regionals. Long-term this will hurt regional banks ability to lend.
Will the Biden Administration allow big banks to buy regionals? Watch First Horizon/TD Bank merger in the next few months.
Nah, same play I made. Did the same with BAC back in 2008ish.
You made bank on that one! Good job!
Howd it pay off?
BAC? Great. Preferreds went back and up over par. Best lot was buying L series at like 250.
I bought it.
And yet another FRC post from someone who has no clue what their balance sheet looks like, no one does anymore, and any past performance is mute at this point.
*moot
Maybe there past performance is quiet.
or their past performance is quiet.
It could also go to $0
The PFF rebalancing is tonight. Blackrock’s massive preferred fund so they might end up dumping them or buying more but either way a sharp move is possible to whatever direction.
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Are you sure that preferred shares will be redeemed at $25…?
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After the FDIC deal with first citizens for SIVB what is the incentive for anyone to buy FRC? Let it blow buy the performing assets, get a below market fdic loan rate, and let the fdic share in any losses. Why would anyone take on the risk themselves if they can potentially get that deal after a failure?
Can they?
The idea that the market cares what price you got in is ridiculous. Wait for an anchor point just like everyone else before you go trying to catch the absolute bottom like a lunatic and have no capital to spend for like 3 months.
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Buy a long call
FUCKERY REPUBLIC
Yup. My bags are heavy too.
It’s currently trading at $14
Common equity is yes. Not preferred shares
You fucking clowns don’t quit pushing this FRC shit hey? 😂
👆 holy shit the spamm is real. Actual aids bank.
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So many shills. Be careful out here.
I see you commenting on every single FRC post with pretty much the same shit. Desperate.
Trying to help you, my girl. You clearly need it 😘
My account looks fine with FRC! 🤑🤑🤑
Wtf is going on? Post 25 of this absolute 🗑 bank. Smells like desperation. Holy shit, like stfu with this dogshit. Short FRC for free money.
Yes, been selling puts for free money.
This is the way.
fenriswulfwsb t1_jec3fse wrote
FRC has found a pretty convincing floor. Unless we get bad news, it'll probably slowly edge up. Earnings (two weeks) may be a big opportunity as it will give us the first real window into if they were affected as much as the fear mongering indicated.